So, you want to start a retail business. What now? There’s the idea, the products, the space, taxes, the employees, the website, social media—but what comes first?
Learning how to start a retail business is the first step. That’s why we created this guide; for all you budding entrepreneurs.
Whatever your passion—fashion, artisanal teas, or trading cards—there’s a place for you in the retail space, it’s just a matter of setting yourself up for success from the get-go. In this article, we’re giving you a beginner’s guide to starting a retail business. We’ll explain what a retail business is and the 7 steps you need to take to start one.
Grab a pen and paper—and maybe some of that artisanal tea—and let us guide you to starting your dream retail business.
What is a retail business?
A retail business involves selling goods or services directly to consumers. Think of it as a bridge between manufacturers and the consumers. Owning a retail business often means having a physical storefront, an online platform, or a combination of both, where customers can browse, choose, and buy products.
Why start a retail business?
Other than being passionate about retail and the products you plan to sell, why would you want to start a retail business? Starting a retail business creates a world of opportunities for entrepreneurs. You get to connect with customers, curate a truly unique experience, and carve a niche out for yourself in a particular market.
Also, it seems like the retail market isn’t slowing down despite tight economic times.
|“National Retail Federation forecasts that retail sales during 2023 will grow between 4% and 6% over 2022 to between $5.13 trillion and $5.23 trillion. Last year’s annual retail sales grew 7% over 2021 and totaled $4.9 trillion. This growth rate is above the pre-pandemic, average annual retail sales growth of 3.6%.”
With those numbers, it goes to show that there’s room for more business owners in the retail space.
How to start a retail business in 7 steps
Let’s get into the nitty-gritty of how to start a retail business. Follow the steps below to get started on building your dream retail business.
Step 1: Find your niche
A niche is “a specialized segment of the market for a particular kind of product or service”. That’s the fancy way of saying that you need to set yourself apart from other retail businesses. What’s that special product you sell? Is there a special problem you solve? What’s that special sauce you’re going to bring to your customers?
Before deciding on a niche, you’re going to want to explore what you’re passionate about, do some research on the profitability of your idea, and then the competitors who are in the same niche. After all, there’s nothing worse as a business owner than deciding you’re going to open a retail business dedicated to custom hand-knit tea towels and then discovering that, uh, nobody wants custom hand-knit tea towels—or that there’s a store down the street who already sells custom hand-knit tea towels (and they’re gorgeous!).
Once you’ve done your beginner research, you’re going to dive in even deeper and research your target market’s needs, preferences, and pain points. That’s going to help you create a business different from all of the others.
Step 2: Create a business plan
A business plan is a document that breaks down every detail about a business’ goals and how it hopes to achieve those goals. Think of your business plan like a roadmap; the overarching plan you follow from beginning to end. If you want to stay focused and on task, you’ll need a business plan.
But you’re not the only one who needs this roadmap. If you plan on applying for funding through a bank or investors, they’ll want a very detailed document about how you are going to make your business profitable—and how you plan to pay them back.
The key elements of a business plan are:
- Executive summary: This section introduces your company and the people involved.
- Products and services: Describe your products and services including price and benefits.
- Market analysis: This is where your competitor research and industry research go.
- Marketing strategy: This section shows how you plan to get customers through the door or on your website.
- Financial plans and projections: You’re going to need to estimate what your business is going to spend money on and how much money you’re going to make.
Of course, this is a very basic run-through of a business plan. Make sure you’ve got help and a good understanding of all of the pieces involved. This is one of the most fundamental steps of starting a retail business—or any business for that matter.
Step 3: Take care of the legal stuff
This is the not-so-fun part of starting a new retail business. You need to dot all of your ‘I’s and cross all of your ‘T’s. This is protecting not only the future of your business, but also protecting yourself. Don’t take this step lightly.
A few things to think about:
- Register your business: Sole proprietorship? Partnership? LLC? You’re going to have to choose a business structure before you open up your retail store. Do your research and really think about how you want your business to grow and what that means in terms of structure. Once you decide, go through the proper registration process.
- Research your State and City laws: Check into the local regulations and get the proper permits and licenses you need for your particular business. Each state and city is going to be different and will have its own set of compliance requirements.
- Trademarks: You don’t have to trademark your business name, but you want to make sure your idea isn’t already legally taken.
- Register for an employer identification number (EIN): You’re going to need an EIN for taxes, business loans, business bank accounts, and payroll. You can get an employer identification number (EIN) from the IRS.
- Get small business insurance: Make sure to protect your company and everything in it with small business insurance. Speak to an insurance provider so you are fully covered for what you need.
Step 4: Source the products you want to sell
At this phase of opening your new retail business, you need to build relationships with suppliers or manufacturers to source your products. This is how you stock your store.
Figure out what’s important to you. Do you want your products to be locally sourced? Are you going to be manufacturing them yourself? Is your brand eco-conscious? Do you want to work with other small businesses?
This is the time to negotiate prices and terms, figure out inventory management, and create a smooth supply chain so there are no gaps in product availability.
Step 5: Set up your storefront
Now the fun part! Set up your storefront—brick and mortar, digital, or both. Even though we live in the digital age, 81% of Gen Z consumers prefer to shop in brick-and-mortar shops to discover new products, and more than half of them say in-person browsing is a way to disconnect from the digital world.
Let this part be fun! You can create a brand identity, design your store layout, and build a beautiful user-friendly website. This is where your creativity and passion can really shine through.
Step 6: Hire and train your employees
This part sounds easy, but there are so many steps to hiring and onboarding. And you aren’t going to want to rush it. A store is only as good as its customer service. In fact, Salesforce found that 88% of consumers said the experience a company provides is just as important as its products or services.
Creating a warm and welcoming environment—one that values employee happiness—is going to boost customer happiness.
But there are lots of moving pieces to having employees. Luckily, Homebase can help you with many of the ins and outs of hiring, training and managing employees.
Some things to think about if you have employees:
- Onboarding and training new employees: You need a training manual that helps get everyone on the same page from the get-go and a way to get that manual into every employee’s hands. Homebase has a team communication tool where you can send important documents and have them sign off on having received them.
- Scheduling: Each employee is going to have different availability and keeping it all straight can cause an immediate headache. The Homebase scheduling tool can keep all schedules, time-off requests, and shift swaps straight while also distributing that schedule to everyone.
- Time clock: Time tracking can be easy-peasy when you’ve got the right software. Allowing your employees to clock in and out through an app on their phones that then turns those punches into timesheets is a win/win for you and for them.
- Payroll: One of the most stressful parts of business ownership is payroll. Luckily, the Homebase payroll software can make payroll painless.
Step 7: Open your doors to the public
The day is finally here. The day you can open your doors to the public. You can do this as quietly or as loudly as you would like. You can throw a grand opening party, invite friends and family for a test run, or partner up with other businesses to create buzz. There’s no wrong way to announce your retail business is open.
Enjoy this step. This is the moment you’ve been waiting for! Remember to take it all in, even for a second, to really soak up all of your hard work.
Start your new retail business off on the right foot
We won’t skate around the truth. Starting a new business is hard. There are a lot of things to think about and you can find that something you were once passionate about has become just one big to-do list.
Homebase can help you manage your new retail business with their suite of tools. From time tracking, to scheduling, to payroll, your business can thrive from the get-go. Learn more today
How to start a retail business FAQs
How do I start a retail business if I don’t have any experience?
You can start a retail business even if you don’t have any experience. There are so many people who have been where you are that are now running successful retail businesses. You can research those companies or even see if they’d be willing to go for a coffee chat. You also have a wealth of knowledge at your fingertips with the Internet. Everything you could ever want to know is out there for you to learn. Search our other blog entries for some great places to start!
How do I market my retail business?
There are so many great ways to market a retail business. The good news is that many of them are free. Using social media to create buzz, teaming up with other local businesses to form partnerships, inviting influencers to try your products, or even just hitting the streets and handing out flyers are all simple and relatively inexpensive ways to market your business.
What are some challenges new retail businesses face?
Some of the biggest challenges new retail spaces face are supply chain problems, delivering great customer service experiences, and getting the word out there that they even exist. Knowing these challenges before you face them can help you come up with great strategies to avoid them.